RESTRICTED STOCK AGREEMENT
This
Restricted Stock Agreement (this “Agreement”)
is made as of this 29th
day of September, 2006 (the “Effective
Date”)
between Xxxxxxx Company, a Delaware corporation (the “Company”),
and the undersigned (the “Restricted
Shareholder”).
Certain capitalized terms used herein are defined in Section
7
hereof.
WHEREAS,
the Company believes it to be in the best interests of the Company and its
shareholders to take action to promote work-force stability, to reward
performance and otherwise align the Restricted Shareholder’s interests with
those of the Company;
WHEREAS,
accordingly, the Company has determined to issue restricted stock to the
Restricted Shareholder in accordance with the provisions of this Agreement;
and
WHEREAS,
the Company desires to be assured that the confidential information and goodwill
of the Company will be preserved for the exclusive benefit of the
Company.
NOW,
THEREFORE, in consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Purchase
and Sale of Restricted Shareholder Stock.
(a) Upon
execution of this Agreement and payment of the Original Purchase Price (as
hereinafter defined), the Company will issue to the Restricted Shareholder
that
number of shares of Class B Common Stock, par value $0.01 per share, of the
Company (the “Class
B Common Stock”)
set forth below such Restricted Shareholder’s name on the signature page
attached hereto, for a purchase price of $0.01 per share (the “Original
Purchase Price”).
All of such shares of Class B Common Stock purchased by the Restricted
Shareholder pursuant to this Agreement are referred to herein as “Restricted
Shareholder Stock.”
To secure the Company’s rights under the Repurchase Option in Section
3,
the Company will retain possession of the certificates representing the
Restricted Shareholder Stock and will provide the Restricted Shareholder with
copies thereof.
(b) The
parties agree that the fair market value of each share of Restricted Stock
as of
the date hereof is $4.74. The Restricted Shareholder, in his or her sole
discretion, may make an effective election with the Internal Revenue Service
(the “IRS”)
under Section 83(b) of the Code and the regulations promulgated thereunder.
The Restricted Shareholder understands that under applicable law such election
must be filed with the IRS no later than thirty (30) days after any acquisition
of the Restricted Shareholder Stock to be effective. If the Restricted
Shareholder files an effective election, the excess of the fair market value
of
the Restricted Shareholder Stock (which the IRS may assert is different from
the
fair market value determined by the parties) covered by such election over
the
amount paid by the Restricted Shareholder for the stock will be treated as
ordinary income received by the Restricted Shareholder, and the Company or
its
subsidiary, Xxxxxxx Bedding Company, will withhold from the Restricted
Shareholder’s compensation all amounts required under applicable law. If the
Restricted Shareholder does not file an effective election, all appreciation
on
the Restricted Shareholder Stock from the date of issuance will generally be
taxable as ordinary income when such stock vests pursuant to this Agreement.
(c) In
connection with the acquisition of the Restricted Shareholder Stock, the
Restricted Shareholder represents and warrants to the Company that:
(i) the
Restricted Shareholder Stock to be acquired by the Restricted Shareholder will
be acquired for the Restricted Shareholder’s own account, for investment only
and not with a view to, or intention of, distribution thereof in violation
of
the Securities Act, or any applicable state securities laws, and the Restricted
Shareholder Stock will not be disposed of in contravention of the Securities
Act
or any applicable state securities laws or this Agreement or the
Securityholders’ Agreement;
(ii) the
Restricted Shareholder, either alone or acting in conjunction with a Purchaser
Representative (as such term is defined in Regulation D of the Securities
Act), generally has such knowledge and experience in business and financial
matters and with respect to investments in securities of privately held
companies so as to enable the Restricted Shareholder to understand and evaluate
the risks and benefits of his or her investment in the Restricted Shareholder
Stock;
(iii) the
Restricted Shareholder has no need for liquidity in his or her investment in
the
Restricted Shareholder Stock and is able to bear the economic risk of his or
her
investment in the Restricted Shareholder Stock for an indefinite period of
time
and understands that the Restricted Shareholder Stock has not been registered
or
qualified under the Securities Act or any applicable state securities laws,
by
reason of the issuance of the Restricted Shareholder Stock in a transaction
exempt from the registration and qualification requirements of the Securities
Act or such state securities laws and, therefore, cannot be sold unless
subsequently registered or qualified under the Securities Act or such state
securities laws or an exemption from such registration or qualification is
available;
(iv) the
Restricted Shareholder acknowledges that he or she is aware that the Shares
may
not be sold pursuant to Rule 144 promulgated under the Securities Act unless
all
of the conditions of that Rule are met. Among the current conditions for use
of
Rule 144 by certain holders is the availability to the public of current
information about the Company. Such information is not now available, and the
Company has no current plans to make such information available;
(v) the
Restricted Shareholder has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of the Restricted
Shareholder Stock and has had full access to or been provided with such other
information concerning the Company as the Restricted Shareholder has requested;
and
(vi) This
Agreement constitutes the legal, valid and binding obligation of the Restricted
Shareholder, enforceable in accordance with its terms, and the execution,
delivery and performance of this Agreement by the Restricted Shareholder does
not and will not conflict with, violate or cause a breach of any agreement,
contract or instrument to which the Restricted Shareholder is a party or any
judgment, order or decree to which the Restricted Shareholder is
subject.
(d) As
an inducement to the Company to issue the Restricted Shareholder Stock to the
Restricted Shareholder and as a condition thereto, the Restricted Shareholder
acknowledges and agrees that:
(i) neither
the issuance of the Restricted Shareholder Stock to the Restricted Shareholder
nor any provision contained herein shall entitle the Restricted Shareholder
to
remain on the Board of or in the employment of the Company or any of its
Subsidiaries, if any, or affect the rights of the Company, its shareholders
or
any of its Subsidiaries to terminate the Restricted Shareholder’s service to or
employment with the Company or any of its Subsidiaries at any time for any
reason; and
(ii) except
as provided in any other agreement between the Company and/or Xxxxxxx Bedding
Company or any Subsidiary thereof and the Restricted Shareholder, the Company
shall have no duty or obligation to disclose to the Restricted Shareholder,
and
the Restricted Shareholder shall have no right to be advised of, any material
information regarding the Company and its Subsidiaries, if any, at any time
prior to, upon or in connection with the forfeiture of the Restricted
Shareholder Stock upon the termination of the Restricted Shareholder’s service
to or employment with the Company or a Subsidiary thereof.
(e) In
connection with the issuance and sale by the Company to the Restricted
Shareholder of the Restricted Shareholder Stock, the Company represents and
warrants that:
(i) the
Company is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate the assets used in
its
business, to carry on its business as presently conducted, to enter into this
Agreement, to perform its obligations hereunder, and to consummate the
transactions contemplated hereby;
(ii) the
Company has taken all corporate action necessary to authorize its execution
and
delivery of this Agreement, its performance of its obligations thereunder,
and
its consummation of the transactions contemplated thereby;
(iii) this
Agreement constitutes a valid and binding obligation of the Company, enforceable
in accordance with its terms; and
(iv) the
Restricted Shareholder Stock has been duly authorized and validly issued, fully
paid and nonassessable and will be free of all Encumbrances created by or
through the Company. For purposes of this clause, “Encumbrance”
means any security interest, mortgage, lien, pledge, charge, easement,
reservation, restriction, or similar right of any third party.
2. Vesting
of Restricted Shareholder Stock.
(a) General.
(i) Vesting.
The shares of Restricted Shareholder Stock granted hereunder (the “Shares”)
will be deemed “vested” (the “Vested
Shares”)
as follows: Shares shall become Vested Shares in accordance with this
Section
2,
based upon the Company’s achievement of the Consolidated Adjusted EBITDA targets
set forth below (each, the “Target
EBITDA”)
for each of the Company’s fiscal years ending December 30, 2006,
December 29, 2007, December 27, 2008 and December 26, 2009 (the
“Measurement
Years”).
EBITDA
Targets
(dollars
in millions)
|
Measurement
Years
|
Target
EBITDA
|
Cumulative
Target
EBITDA
|
90%
of Target
EBITDA
|
90%
of Cumulative Target
EBITDA
|
Eligible
Shares
|
|
2006
|
$149.7
|
$149.7
|
$134.7
|
$134.7
|
25%
of Restricted Shareholder Stock
|
|
2007
|
$181.9
|
$331.6
|
$163.7
|
$298.4
|
25%
of Restricted Shareholder Stock
|
|
2008
|
$214.1
|
$545.7
|
$192.7
|
$491.1
|
25%
of Restricted Shareholder Stock
|
|
2009
|
$230.0
|
$775.7
|
$207.0
|
$698.1
|
25%
of Restricted Shareholder Stock
|
The
minimum Target EBITDA numbers set forth above shall be equitably adjusted by
the
Board for acquisitions and dispositions made by the Company (whether by purchase
or sale of assets or stock, merger, consolidation or otherwise) and such
adjustments may take into account the pro forma annual Consolidated Adjusted
EBITDA of any acquired business, as determined by the Board.
(A) Performance
Based Vesting.
At the end of each Measurement Year, on the Measurement Date, the percentage
of
Shares set forth above shall be eligible to vest (the “Eligible
Shares”).
On each Measurement Date, 50% of the Eligible Shares shall become Vested Shares
if at least 90% of the Target EBITDA amount was met for the prior Measurement
Year. If more than 90% of the Target EBITDA amount was met for the prior
Measurement Year, then the Eligible Shares shall become Vested Shares on a
straight line basis such that an additional 5% of Eligible Shares shall become
Vested Shares for each 1% that actual Consolidated Adjusted EBITDA exceeds
90%
of the Target EBITDA amount.
(ii) Change
of Control.
(A) Shares
that are not Vested Shares will accelerate as set forth below upon a Change
of
Control solely if the Company (a) achieves at least 90% of the Target EBITDA
for
the Measurement Year immediately preceding the year in which the Change of
Control occurs, and (b) the actual Consolidated Adjusted EBITDA for the
Measurement Year immediately preceding the year in which the Change of Control
occurs exceeds the actual Consolidated Adjusted EBITDA for the preceding year.
If (x) the conditions set forth in clauses (a) and (b) above are met, and (y)
the Company achieves 90% of the Cumulative Target EBITDA above for the
Measurement Year completed immediately prior to the Change of Control, then
50%
of the Shares that were Eligible Shares but which did not previously become
Vested Shares (the “Missed
Shares”)
and 50% of the Shares that are not yet Eligible Shares shall become Vested
Shares. If the Company achieves more than 90% of the Cumulative Target EBITDA
above for the immediately preceding Measurement Year, then a number of Missed
Shares and Shares that are not yet Eligible Shares will become Vested Shares,
determined on a straight line basis such that an additional 5% of the Missed
Shares and 5% of the Shares that are not yet Eligible Shares will become Vested
Shares for each 1% that actual Consolidated Adjusted EBITDA for the immediately
preceding Measurement Year exceeds 90% of the Cumulative Target EBITDA set
forth
above.
(B) Notwithstanding
the foregoing paragraph, Shares that are not Vested Shares will accelerate
upon
a Change of Control which occurs in the Measurement Year ending
December 30, 2006 as follows: if the Company achieves 90% of the 2006 Year
to Date Target EBITDA (as defined below) for the month completed immediately
prior to the Change of Control, then 50% of the Shares that are not yet Eligible
Shares shall become Vested Shares. The Target EBITDA for each month in 2006
is
set forth below and the 2006 Year to Date Target EBITDA represents the
cumulative Target EBITDA for the period commencing January 1, 2006 and ending
on
the last day of such month (the "Year to Date Target EBITDA"). If the Company
achieves more than 90% of the 2006 Year to Date Target EBITDA for the month
completed immediately prior to the Change of Control, then a number of Shares
that are not yet Eligible Shares will become Vested Shares, determined on a
straight line basis such that an additional 5% of the Shares that are not yet
Eligible Shares will become Vested Shares for each 1% that actual Consolidated
Adjusted EBITDA for the period commencing January 1, 2006 and ending on the
last
day of the month immediately preceding the Change of Control exceeds 90% of
the
2006 Year to Date Target EBITDA.
|
Month
|
2006
Monthly
Target
EBITDA
(dollars
in millions)
|
2006
Year to Date
Target
EBITDA
(dollars
in millions)
|
|
January
|
$11.9
|
$11.9
|
|
February
|
$10.9
|
$22.9
|
|
March
|
$10.5
|
$33.3
|
|
April
|
$13.6
|
$46.9
|
|
May
|
$11.4
|
$58.3
|
|
June
|
$11.4
|
$69.7
|
|
July
|
$16.0
|
$85.7
|
|
August
|
$14.3
|
$100.0
|
|
September
|
$14.1
|
$114.1
|
|
October
|
$14.9
|
$129.1
|
|
November
|
$10.7
|
$139.7
|
|
December
|
$9.9
|
$149.7
|
(b) In
the event the Restricted Shareholder ceases to serve on the Board of, or be
employed by the Company or any of its Subsidiaries on a full-time basis for
any
reason, then (i) all Shares of Restricted Shareholder Stock shall cease vesting
effective as of the date upon which the Restricted Shareholder ceases to so
serve or be so employed (the “Termination
Date”)
and, (ii) in the event that the Company achieves the Target EBITDA with respect
to the Measurement Year in which such termination occurs, then the Eligible
Shares with respect to such year multiplied by a fraction, the numerator of
which shall equal the number of whole months during such year that the
Restricted Shareholder served on the Board or remained employed with the Company
and the denominator of which is 12, shall become Vested Shares as of the end
of
such year.
3. Repurchase
of Shares.
(a) In
the event that the Restricted Shareholder ceases to serve on the Board of,
or be
employed by the Company or any of its Subsidiaries on a full-time basis for
any
reason, then all Shares of Restricted Shareholder Stock (whether held by the
Restricted Shareholder or by one or more of the Restricted Shareholder’s
transferees) which as of the date of termination:
(i) have
not vested pursuant to Section
2
hereof, will be subject to repurchase by the Company, at its option (the
“Non-Vested
Repurchase Option”),
for the lower of the Original Purchase Price of the Restricted Shareholder
Stock
and Fair Market Value as of the date of repurchase;
(ii) have
vested pursuant to Section
2
hereof, will be subject to repurchase by the Company, at its option (the
“Vested
Repurchase Option”),
for Fair Market Value as of the date of repurchase.
(b) In
the event of a Change of Control, then all Shares of Restricted Shareholder
Stock (whether held by the Restricted Shareholder or by one or more of the
Restricted Shareholder’s transferees) which, as of the date of such Change of
Control, have not become Vested Shares pursuant to Section
2,
will be subject to repurchase by the Company, at its option (the “Non-Vested
Change of Control Repurchase Option”)
for the lower of the Original Purchase Price of the Restricted Shareholder
Stock
and Fair Market Value.
(c) The
Non-Vested Change of Control Repurchase Option, together with the Non-Vested
Repurchase Option and the Vested Repurchase Option, are referred to collectively
as the “Repurchase
Options.”
The Repurchase Options shall be exercised by the Company, or its designee,
from
time to time, by delivering to the Restricted Shareholder a written notice
of
exercise and a check in the amount of the Original Purchase Price or Fair Market
Value, as determined in accordance with Sections
3(a) and (b)
above. Upon delivery of such notice and payment of the purchase price as
described above, the Company, or its designee, shall become the legal and
beneficial owner of the Shares of Restricted Shareholder Stock being repurchased
and all rights and interest therein or related thereto, and the Company, or
its
designee, shall have the right to transfer to its own name the number of Shares
of Restricted Shareholder Stock being repurchased without further action by
the
Restricted Shareholder or any of his or her transferees. If the Company or
its
designee elect to exercise the repurchase rights pursuant to this Section
3
and the Restricted Shareholder or his or her transferee fails to deliver the
Shares of Restricted Shareholder Stock in accordance with the terms hereof,
the
Company, or its designee, may, at its option, in addition to all other remedies
it may have, deposit the purchase price in an escrow account administered by
an
independent third party (to be held for the benefit of and payment over to
the
Restricted Shareholder or his or her transferee in accordance herewith),
whereupon the Company shall by written notice to the Restricted Shareholder
cancel on its books the certificates(s) representing such Shares of Restricted
Shareholder Stock registered in the name of the Restricted Shareholder and
all
of the Restricted Shareholder’s or his or her transferee’s right, title, and
interest in and to such Shares of Restricted Shareholder Stock shall terminate
in all respects.
(d) Notwithstanding
the foregoing, if at any time the Company elects to purchase any Class B
Common Stock pursuant to this Section 3,
the Company shall pay the purchase price for the Class B Common Stock it
purchases (i) first, by offsetting indebtedness, if any, owing from such
Restricted Shareholder to the Company and (ii) then, by the Company’s delivery
of cash for the remainder of the purchase price, if any, against delivery of
the
certificates or other instruments representing the Class B Common Stock so
purchased, duly endorsed; provided that,
if any such cash payment at the time such payment is required to be made would
result (A) in a violation of any law, statute, rule, regulation, policy,
order, writ, injunction, decree or judgment promulgated or entered by any
federal, state, local or foreign court or governmental authority applicable
to
the Company or any of its Subsidiaries or any of its or their property or
(B) after giving effect thereto, a Financing Default, or (C) if the Board
determines in good faith that immediately prior to such purchase there shall
exist a Financing Default which prohibits such purchase, dividend or
distribution ((A) through (C) collectively the “Cash
Deferral Conditions”),
the portion of the cash payment so affected may be made by the Company’s
delivery of a promissory note or senior preferred shares of the Company with
a
liquidation preference equal to the balance of the purchase price. The
promissory note or senior preferred shares shall accrue interest or yield,
as
the case may be, annually at the “prime rate” published in The Wall Street
Journal on the date of issuance, which interest or yield, as the case may be,
shall be payable at maturity or upon payment of distributions by the Company.
The value of each such senior preferred share shall as of its issuance be deemed
to equal (A) the portion of the cash payment paid by the issuance of such
preferred shares divided by (B) the number of senior preferred shares so
issued. Any senior preferred shares or the
promissory note shall be redeemed or payable when and to the extent the Cash
Deferral Condition which prompted their issuance no longer exists.
(e) In
the event that Restricted Shareholder Stock is repurchased pursuant to this
Section
3,
the Restricted Shareholder and his or her successors, assigns or Representatives
shall take (at the Company’s expense) all steps necessary and desirable to
obtain all required third-party, governmental and regulatory consents and
approvals and take all other actions necessary and desirable to facilitate
consummation of such repurchase in a timely manner.
4. Legend.
The
certificates representing the Restricted Shareholder Stock will bear the
following legend:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO REPURCHASE AND CERTAIN
OTHER AGREEMENTS SET FORTH IN A RESTRICTED STOCK AGREEMENT DATED AS OF SEPTEMBER
29, 2006 BETWEEN THE COMPANY AND THE OTHER SIGNATORY THERETO. A COPY OF SUCH
AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY’S PRINCIPAL PLACE
OF BUSINESS WITHOUT CHARGE.
THE
SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE AND THE RIGHTS OF THE HOLDER OF SUCH SECURITIES IN RESPECT
OF THE ELECTION OF DIRECTORS ARE SUBJECT TO A SECURITYHOLDERS’ AGREEMENT DATED
DECEMBER 19, 2003 AMONG THL BEDDING HOLDING COMPANY AND CERTAIN HOLDERS OF
ITS
OUTSTANDING CAPITAL STOCK. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST
BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THL BEDDING HOLDING COMPANY.
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES OR BLUE SKY LAWS. THESE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT OR LAWS.”
5. Restrictions
on Transfer, Conversion and Voting.
(a) The
Company and the Restricted Shareholder acknowledge and agree that the Shares
of
Restricted Shareholder Stock are subject to and restricted by the
Securityholders’ Agreement and with respect to such Shares of Restricted
Shareholder Stock, the Restricted Shareholder shall be an “Employee” or “Senior
Manager,” as the case may be, and as each such term is used in the
Securityholders’ Agreement. Notwithstanding anything to the contrary contained
in the Securityholders’ Agreement, no Shares of Restricted Shareholder Stock
that have not become Vested Shares pursuant to Section
2
hereof may be transferred to any Person and no Shares of Restricted Shareholder
Stock that are Vested Shares may be transferred to any Person who is not an
Affiliate of the Restricted Shareholder. The Vested Shares may be transferred
by
will or the laws of descent and distribution.
(b) Prior
to any Transfer, the transferee shall agree, by execution of a Joinder
Agreement, to be bound by this Agreement as holder of Restricted Shareholder
Stock and by the Securityholders’ Agreement as an “Employee” or “Senior
Manager”, as the case may be. Any Transfer or attempted Transfer of any
Restricted Shareholder Stock in violation of the preceding sentence shall be
void, and the Company shall not record such Transfer on its books or treat
any
purported transferee of such Restricted Shareholder Stock as the owner of such
stock for any purpose.
(c) The
Restricted Shareholder agrees that so long as the Restricted Shareholder owns
Shares of Restricted Shareholder Stock which have not become Vested Shares
pursuant to Section
2
hereof, the Restricted Shareholder shall be obligated to vote all of his, her
or
its Shares of Restricted Shareholder Stock which have not become Vested Shares
pursuant to Section
2
hereof in the same manner and proportions as the votes cast by the holders
of a
majority of the Company’s voting capital stock not subject to such repurchase
rights. If the Restricted Shareholder fails or refuses to vote his, her or
its
Shares of Restricted Shareholder Stock which have not become Vested Shares
pursuant to Section
2
hereof as required by, or votes his, her or its Shares of Restricted Shareholder
Stock which have not become Vested Shares pursuant to Section
2
hereof in contravention of this Section
5(c),
then the Restricted Shareholder hereby grants to each of the President and
Treasurer of the Company, acting solely in his or her capacity as such, an
irrevocable proxy, coupled with an interest, to vote such Shares in accordance
with Section
5(c).
6. Restricted
Activities.
(a) The
Restricted Shareholder acknowledges that (1) the Company has separately
bargained and paid additional consideration for the restrictive covenants
herein; (2) the Company will provide certain benefits to the Restricted
Shareholder hereunder in reliance on such covenants in view of the unique and
essential nature of the services the Restricted Shareholder will perform on
behalf of the Company and the irreparable injury that would befall the Company
should the Restricted Shareholder breach such covenants; and (3) as used in
this
Section
6
and for all terms defined in Section
7
that are utilized in Section
6,
the definition of the “Company” includes the Company and/or its Subsidiaries,
Affiliates, and the successors and assigns of each and any such related
entities.
(b) The
Restricted Shareholder agrees that the Restricted Shareholder’s work for the
Company has brought and will bring Restricted Shareholder into close contact
with many of the Company’s Customers, Customer Prospects, Vendors, Trade
Secrets, and Confidential Information. The Restricted Shareholder further agrees
that the covenants in this Section
6
are reasonable and necessary to protect the Company’s legitimate business
interests and its Customer, Customer Prospect, and/or Vendor relationships,
Trade Secrets, and Confidential Information.
(c) The
Restricted Shareholder agrees to faithfully perform the duties assigned to
the
Restricted Shareholder and will not engage in any other employment or business
activity while employed by the Company that might interfere with the Restricted
Shareholder’s full-time performance of the Restricted Shareholder’s duties for
the Company or cause a conflict of interest. The Restricted Shareholder agrees
to abide by all of the Company’s policies and procedures, which may be amended
from time-to-time.
(d) The
Restricted Shareholder agrees that, due to Restricted Shareholder’s position,
the Restricted Shareholder’s engaging in any activity that may breach this
Agreement will cause the Company great, immediate, and irreparable
harm.
(e) Duty
of Confidentiality.
The Restricted Shareholder agrees that during the Restricted Shareholder’s
employment with the Company and for a period of five (5) years following the
termination of such employment for any reason, the Restricted Shareholder shall
not directly or indirectly divulge or make use of any Confidential Information
outside of the Restricted Shareholder’s employment with the Company (so long as
the information remains confidential) without the prior written consent of
the
Company. The Restricted Shareholder shall not directly or indirectly
misappropriate, divulge, or make use of Trade Secrets for an indefinite period
of time, so long as the information remains a Trade Secret as defined by the
DUTSA and/or any other applicable law. The Restricted Shareholder further agrees
that if the Restricted Shareholder is questioned about information subject
to
this Agreement by anyone not authorized to receive such information, the
Restricted Shareholder will notify the Company’s General Counsel within 24
hours. The Restricted Shareholder acknowledges that applicable law may impose
longer duties of non-disclosure, especially for Trade Secrets, and that such
longer periods are not shortened by this Agreement.
(f) Return
of Confidential Information And Company Property.
The Restricted Shareholder agrees to return to the Company all Confidential
Information and/or Trade Secrets within three (3) calendar days following the
termination of the Restricted Shareholder’s employment for any reason. To the
extent the Restricted Shareholder maintains Confidential Information and/or
Trade Secrets in electronic form on any computers or other electronic devices
owned by the Restricted Shareholder, the Restricted Shareholder agrees to
irretrievably delete all such information and to confirm the fact of deletion
in
writing within three (3) calendar days following termination of employment
with
the Company for any reason. The Restricted Shareholder also agrees to return
all
property in the Restricted Shareholder’s possession at the time of the
termination of the employment with the Company, including but not limited to
all
documents, records, tapes, and other media of every kind and description
relating to the Business of the Company and its Customers, Customer Prospects,
and/or Vendors, and any copies, in whole or in part, whether or not prepared
by
the Restricted Shareholder, all of which shall remain the sole and exclusive
property of the Company.
(g) Proprietary
Rights.
Proprietary Rights shall be promptly and fully disclosed by the Restricted
Shareholder to the Company’s General Counsel and shall be the exclusive property
of the Company as against the Restricted Shareholder and the Restricted
Shareholder’s successors, heirs, devisees, legatees and assigns. The Restricted
Shareholder hereby assigns to the Company Restricted Shareholder’s entire right,
title, and interest therein and shall promptly deliver to the Company all
papers, drawings, models, data, and other material relating to any of the
foregoing Proprietary Rights conceived, made, developed, created or reduced
to
practice by the Restricted Shareholder as aforesaid. All copyrightable
Proprietary Rights shall be considered “works made for hire.” The Restricted
Shareholder shall, upon the Company’s request and at its expense, execute any
documents necessary or advisable in the opinion of the Company’s counsel to
assign, and confirm the Company’s title in the foregoing Proprietary Rights and
to direct issuance of patents or copyrights to the Company with respect to
such
Proprietary Rights as are the Company’s exclusive property as against the
Restricted Shareholder and/or the Restricted Shareholder’s successors, heirs,
devisees, legatees and assigns under this Section
6.(g)
or to vest in the Company title to such Proprietary Rights as against the
Restricted Shareholder and/or the Restricted Shareholder’s successors, heirs,
devisees, legatees and assigns, the expense of securing any such patent or
copyright, however, to be borne by the Company.
(h) Non-Competition.
The Restricted Shareholder covenants and agrees that, during the term of
Restricted Shareholder’s employment with the Company and for twelve (12) months
after the termination thereof, regardless of the reason for the employment
termination, the Restricted Shareholder will not, directly or indirectly,
anywhere in the Territory, on behalf of any Competitive Business perform the
same or substantially the same Job Duties.
(i) Non-Solicitation
of Customers, Customer Prospects, and Vendors.
The Restricted Shareholder also covenants and agrees that during the term of
Restricted Shareholder’s employment with the Company and for twelve (12) months
after the termination thereof, regardless of the reason for the employment
termination, the Restricted Shareholder will not, directly or indirectly,
solicit or attempt to solicit any business from any of the Company’s Customers,
Customer Prospects, or Vendors with whom the Restricted Shareholder had Material
Contact during the last two (2) years of the Restricted Shareholder’s employment
with the Company.
(j) Non-Solicitation
of Employees.
The Restricted Shareholder also covenants and agrees that during the term of
Restricted Shareholder’s employment with the Company and for twelve (12) months
after the termination thereof, regardless of the reason for the employment
termination, the Restricted Shareholder will not, directly or indirectly, on
the
Restricted Shareholder’s own behalf or on behalf of or in conjunction with any
person or legal entity, recruit, solicit, or induce, or attempt to recruit,
solicit, or induce, any non-clerical employee of the Company with whom the
Restricted Shareholder had personal contact or supervised while performing
the
Restricted Shareholder’s Job Duties, to terminate their employment relationship
with the Company.
(k) Ownership
of Securities.
Notwithstanding the provisions set forth herein, the Restricted Shareholder
shall have the right to (a) invest in or acquire any class of securities issued
by any firm, partnership, corporation, and/or any other entity and/or person
not
engaged in any Competitive Business, or (b) acquire as a passive investor (with
no involvement in the operations or management of the business) up to 1% of
any
class securities which is (i) issued by any Competitive Business, and (ii)
publicly traded on a national securities exchange or over-the-counter
market.
(l) No
Disparagement.
Each of the parties hereto covenants and agrees that, during the term of the
Restricted Shareholder’s employment with the Company and for twelve (12) months
after the termination thereof, regardless of the reason for the employment
termination, such party will not, directly or indirectly, either in writing
or
by any other medium, make any disparaging, derogatory or negative statement,
comment or remark about the other parties hereto, or any of them, or Xxxxxx
X.
Xxx Partners, or any other their respective officers, directors, employees,
Affiliates, Subsidiaries, successors and assigns, as the case may be; provided,
however, that this Section
6.(l)
shall not be construed to require any Person to provide other than truthful
testimony when compelled to testify pursuant to an enforceable subpoena or
court
order.
7. Definitions.
The
following terms shall have the meanings ascribed below:
“Affiliate”
of any particular Person means any other Person controlling, controlled by
or
under common control with such particular Person or, with respect to any
individual, such individual’s spouse and descendants (whether natural or
adopted) and any trust, partnership, limited liability company or similar
vehicle established and maintained solely for the benefit of (or the sole
members or partners of which are) such individual, such individual’s spouse
and/or such individual’s descendants.
“Board”
means the Board of Directors of the Company.
“Business
of the Company”
means the highly competitive business of developing, manufacturing, marketing,
distributing, and/or selling sleep products, including mattresses, foundations,
changing pads and covers, and bedding components for the same.
“Cause”
shall mean any one or more of the following:
(a) The
Restricted Shareholder shall have been convicted of, or shall have pleaded
guilty or nolo contendere
to, any felony or a crime involving fraud, personal dishonesty or moral
turpitude (whether or not in connection with his employment);
(b) The
Restricted Shareholder shall have repeatedly or consistently failed or refused
to perform his or her duties or fulfill his or her responsibilities to the
Company, after verbal notice and ten (10) days opportunity to cure;
(c)
The
Restricted Shareholder shall have breached any provision of Section 6
hereof; or
(d)
The
Restricted Shareholder shall have committed any fraud, embezzlement,
misappropriation of funds, breach of fiduciary duty or other act of dishonesty
against the Company.
“Change
of Control”
shall mean the consummation of a transaction, whether in a single transaction
or
in a series of related transactions that are consummated contemporaneously
(or
consummated pursuant to contemporaneous agreements), with any other party or
parties, other than an Affiliate of THL, on an arm's-length basis, pursuant
to
which (a) a party or group (as defined under Rule 13d under the Securities
Exchange Act of 1934, as amended) who is not a stockholder of the Company on
the
Effective Date, acquires, directly or indirectly (whether by merger, stock
purchase, recapitalization, reorganization, redemption, issuance of capital
stock or otherwise), more than 50% of the voting stock of the Company, (b)
such
party or parties, directly or indirectly, acquire assets constituting all or
substantially all of the assets of the Company and its Subsidiaries on a
consolidated basis, or (c) prior to an initial public offering of the Company
common stock pursuant to an offering registered under the Securities Act, Xxxxxx
X. Xxx Equity Fund V, L.P., a Delaware limited partnership, and its affiliates
cease to have the ability to elect, directly or indirectly, a majority of the
Board.
“Class
A Common Stock”
means the Company’s Class A Common Stock, $0.01 par value per
share.
“Class
B Common Stock”
has the meaning set forth in Section
1(a)
hereof.
“Code”
shall mean the Internal Revenue Code of 1986, as amended.
“Competitive
Business(es)”
include any firm, partnership, joint venture, corporation and/or any other
entity and/or person, including but not limited to Sealy Corporation, Serta
International, Spring Air Company, Select Comfort Corporation, Tempur-Pedic
International, Inc., King Koil Licensing Company, Inc., International Bedding
Corp., and/or any licensee of such entity, that develops, manufactures, markets,
distributes, and/or sells any of the sleep products described in the definition
for the “Business of the Company.”
“Confidential
Information”
means information about the Company and its Customers, Customer Prospects,
and/or Vendors that is not generally known outside of the Company, which
Restricted Shareholder learned in connection with the Restricted Shareholder’s
employment with the Company. Confidential Information may include, without
limitation: (1) the terms of this Agreement, except as necessary to inform
a subsequent employer of the restrictive covenants contained herein and/or
the
Restricted Shareholder’s attorney, spouse, or professional tax advisor only on
the condition that any subsequent disclosure by any such person shall be
considered a disclosure by the Restricted Shareholder and a violation of this
Agreement; (2) the Company’s business policies, finances, and business
plans; (3) the Company’s financial projections, including but not limited
to, annual sales forecasts and targets and any computation(s) of the market
share of Customers and/or Customer Prospects; (4) sales information
relating to the Company’s product roll-outs; (5) customized software,
marketing tools, and/or supplies that the Restricted Shareholder was provided
access to by the Company and/or created; (6) the identity of the Company’s
Customers, Customer Prospects, and/or Vendors (including names, addresses,
and
telephone numbers of Customers, Customer Prospects, and/or Vendors);
(7) any list(s) of the Company’s Customers, Customer Prospects, and/or
Vendors; (8) the account terms and pricing upon which the Company obtains
products and services from its Vendors; (9) the account terms and pricing
of sales contracts between the Company and its Customers; (10) the proposed
account terms and pricing of sales contracts between the Company and its
Customer Prospects; (11) the names and addresses of the Company’s employees
and other business contacts of the Company; and (12) the techniques,
methods, and strategies by which the Company develops, manufactures, markets,
distributes, and/or sells any of the sleep products described in the definition
for the “Business of the Company.”
“Consolidated
Adjusted EBITDA”
has the meaning set forth in the Credit Agreement.
“Credit
Agreement”
shall mean the Amended and Restated Credit and Guaranty Agreement, dated as
of
August 27, 2004, among Xxxxxxx Bedding Company, as Company, THL-SC Bedding
Company and certain subsidiaries of the Company, as Guarantors, the financial
institutions listed therein, as Lenders, UBS Securities LLC, as Joint Lead
Arranger and as Co-Syndication Agent, Deutsche Bank AG, New York Branch, as
Administrative Agent and Collateral Agent, General Electric Capital Corporation,
as Co-Documentation Agent, CIT Lending Services Corporation, as Co-Documentation
Agent, and Xxxxxxx Sachs Credit Partners L.P., as Sole Bookrunner, a Joint
Lead
Arranger and as Co-Syndication Agent.
“Customers”
means any firm, partnership, corporation and/or any other entity and/or Person
that purchased or purchases from the Company any of the sleep products described
in the definition for the “Business of the Company.”
“Customer
Prospects”
means any firm, partnership, corporation and/or any other entity and/or Person
reasonably expected by the Company to purchase from the Company any of the
sleep
products described in the definition for the “Business of the
Company.”
“DUTSA”
means Delaware Uniform Trade Secrets Act, 6 Del.
Code Xxx.§§
2001-2011.
“Fair
Market Value”
shall be determined by the Board in good faith. Upon such determination, the
Company shall promptly provide the Restricted Shareholder with notice of the
Fair Market Value so determined (the “Board
Notice”).
In the event of a determination of Fair Market Value with respect to Class
B
Common Stock owned by a Senior Manager, such Senior Manager shall have the
right
to contest such determination in good faith, by delivery of written notice
to
the Company within ten (10) days of delivery of the Board Notice. If the Senior
Manager does not notify the Company of any disagreement therewith, then the
Fair
Market Value shall be as set forth in the Board Notice. If the Senior Manager
does notify the Company of his or her disagreement with the Fair Market Value
set forth in the Board Notice within such 10-day time period, then the Company
must retain an independent third party appraiser to make such Fair Market Value
determination (the “Final
Determination”),
and such Final Determination shall govern; provided,
however,
that if the Final Determination of Fair Market Value equals less than 110%
of
the Fair Market Value set forth in the Board Notice, then the Senior Manager
shall pay for all costs and expenses of the third party appraiser.
“Financing
Default”
means any event of default or breach under (i) the Credit Agreement,
(ii) that certain senior unsecured floating rate loan facility by and among
THL-SC Bedding Company, certain of its subsidiaries, certain lenders, party
thereto and Deutsche Bank, A.G., Cayman Islands Branch, as administrative agent,
as amended, modified, restated or refinanced from time to time, (iii) the
covenant contained in the Indenture which permits repurchases by the Company
of
employee stock not exceeding a specified amount in the aggregate, or (iv) any
other similar notes or instruments that the Company or its Subsidiaries may
issue from time to time.
“Fully
Diluted Shares”
means, as of any date of determination, the number of shares of Class A Common
Stock and Class B Common Stock outstanding, plus (without duplication) shares
of
Class A Common Stock and Class B Common Stock issuable, whether at such time
or
upon the passage of time or the occurrence of future events, upon the exercise,
conversion or exchange of all then-outstanding rights, warrants, options,
convertible securities, or exchangeable securities or indebtedness, or other
rights, exercisable for or convertible or exchangeable into, directly or
indirectly, Class A Common Stock or Class B Common Stock or securities
exercisable for or convertible or exchangeable into Class A Common Stock or
Class B Common Stock, as the case may be, whether at the time of issuance or
upon the passage of time or the occurrence of some future event.
“Indenture”
shall mean that certain Indenture, dated as of December 19, 2003, governing
the
Company’s Senior Subordinated Notes due 2013, as amended, modified, restated or
refinanced from time to time.
“Job
Duties”
for the Restricted Shareholder are those job duties the Restricted Shareholder
performed for the twelve (12) months prior to the Effective Date of this
Agreement, as well as those duties as may from time-to-time reasonably be
prescribed by the Company during the period of the Restricted Shareholder’s
employment with the Company.
“Material
Contact”
means personal contact or the supervision of the efforts of those who have
direct personal contact with a Customers, Customer Prospects, or Vendors in
an
effort to initiate or further a business relationship between the Company and
such Customers, Customer Prospects, or Vendors.
“Measurement
Date”
shall mean the date upon which the Company shall have received its audited
financial statements for the prior Measurement Year, beginning with the
Measurement Year ending December 30, 2006.
“Person”
shall be construed broadly and shall include, without limitation, an individual,
a partnership, an investment fund, a limited liability company, a corporation,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.
“Proprietary
Rights”
means any and all inventions, discoveries, developments, methods, processes,
compositions, works, supplier and customer lists (including information relating
to the generation and updating thereof), concepts, and ideas (whether or not
patentable or copyrightable) conceived, made, developed, created, or reduced
to
practice by the Restricted Shareholder (whether at the request or suggestion
of
the Company or otherwise, whether alone or in conjunction with others, and
whether during regular hours of work or otherwise) prior to or during the
Restricted Shareholder’s employment, which may be directly or indirectly useful
in, or related to, the Business of the Company or any business or products
contemplated by the Company while the Restricted Shareholder was or is an
employee, officer, or director of the Company.
“Representative”
means, with respect to the deceased Restricted Shareholder, the duly appointed,
qualified and acting personal representative (or personal representatives
collectively) of the estate of the deceased Restricted Shareholder (or portion
of such estate that includes Restricted Shareholder Stock), whether such
personal representative holds the position of executor, administrator or other
similar position qualified to act on behalf of such estate.
“Restricted
Shareholder Stock”
has the meaning set forth in Section
1(a)
hereof. The Restricted Shareholder Stock will continue to be Restricted
Shareholder Stock in the hands of any holder other than the Restricted
Shareholder (except for the Company and except for transferees in a Public
Sale)
and, except as otherwise provided herein, each such other holder of the
Restricted Shareholder Stock will succeed to all rights and obligations
attributable to the Restricted Shareholder as a holder of the Restricted
Shareholder Stock hereunder. The Restricted Shareholder Stock will also include
shares of the Company’s capital stock issued with respect to the Restricted
Shareholder Stock by way of a stock split, stock dividend or other
recapitalization.
“Securities
Act”
means the Securities Act of 1933, as amended, or any successor federal law
then
in force.
“Securityholders’
Agreement”
means the Securityholders’ Agreement dated December 19, 2003 between the Company
and certain stockholders of the Company, as amended, modified or supplemented
from time to time.
“Senior
Manager”
shall mean each of Xxxxxxx Xxx Xxxxx and Xxxxxxx X. Xxxxxxxxx and/or any other
Persons designated by the Board as Senior Managers (collectively, the
“Senior
Managers”).
“Subsidiary”
means any Person of which (i) a majority of the outstanding share capital,
voting securities or other equity interests are owned, directly or indirectly,
by the Company or (ii) the Company is entitled, directly or indirectly, to
appoint a majority of the board of directors or managers or comparable
supervisory body of such Person.
“Territory”
means the United States and Puerto Rico.
“THL”
means Xxxxxx X. Xxx Equity Fund V, L.P., a Delaware limited partnership, Xxxxxx
X. Xxx Parallel Fund V, L.P., Xxxxxx X. Xxx Cayman Fund V, L.P., 1997 Xxxxxx
X.
Xxx Nominee Trust, Xxxxxx X. Xxx Investors Limited Partnership, Xxxxxx
Investments Holdings, LLC, Xxxxxx Investments Employees’ Securities Company I
LLC, and Xxxxxx Investments Employees’ Securities Company II, LLC.
“Trade
Secrets”
means Confidential Information which meets the additional requirements of the
DUTSA and/or under any other applicable law.
“Transfer”
means the sale, transfer, assignment, pledge or other disposal (whether with
or
without consideration and whether voluntarily or involuntarily or by operation
of law) of any Restricted Shareholder Stock.
“Vendors”
means any individual and/or entity that provided goods and services to the
Company.
8. General
Provisions.
(a) Severability.
It is the desire and intent of the parties hereto that the provisions of this
Agreement be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision of this Agreement shall be adjudicated
by a court of competent jurisdiction to be invalid, prohibited or unenforceable
for any reason, such provision, as to such jurisdiction, shall be ineffective,
without invalidating the remaining provisions of this Agreement or affecting
the
validity or enforceability of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding
the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to
such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of
such
provision in any other jurisdiction.
(b) Entire
Agreement.
This Agreement and the Securityholders’ Agreement embody the complete agreement
and understanding among the parties hereto with respect to the subject matter
hereof and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way,
provided, however, that notwithstanding the foregoing, if the Restricted
Shareholder is currently a party to any non-competition or non-solicitation
covenants with the Company or its Subsidiaries and such covenants are to be
governed by and construed in accordance with the laws of the State of Delaware,
without reference to principles of conflict of laws, such covenants (together
with any definitions contained in such covenants and any exhibits or schedules
referenced therein) (collectively, the "Prior Covenants") shall not be
superseded or restated but instead shall be incorporated herein by reference.
The Prior Covenants shall be read together with the covenants contained in
Section 6 hereof in such manner as to make such Prior Covenants and the
covenants contained herein enforceable to the fullest extent permissible under
the laws of the State in which enforcement is sought.
(c) Counterparts.
This Agreement may be executed in separate counterparts, each of which is deemed
to be an original and all of which taken together constitute one and the same
agreement.
(d) Successors
and Assigns.
Except as otherwise provided herein, this Agreement shall bind and inure to
the
benefit of and be enforceable by the Restricted Shareholder, the Company, and
their respective successors, assigns, heirs, representative and estate, as
the
case may be (including subsequent holders of Restricted Shareholder Stock);
provided that the rights and obligations of the Restricted Shareholder under
this Agreement shall not be assignable except in connection with a permitted
transfer of Restricted Shareholder Stock hereunder.
(e) Governing
Law and Remedies.
The parties acknowledge and agree that they are bound by their arbitration
obligations under Exhibit A
attached hereto, which the parties also hereby agree to execute
contemporaneously and is an integral part of this Agreement. The parties agree
and acknowledge that all provisions of this Agreement shall be governed by
and
construed in
accordance with the laws of the State of Delaware exclusively and without
reference to principles of conflict of laws. The Federal Arbitration Act
(“FAA”)
will supersede state laws to the extent inconsistent. The Arbitrator(s) shall
have no authority to apply the law of any other jurisdiction.
Restricted
Shareholder’s initials to acknowledge agreement to Governing Law and Remedies
provision in Section 8(e).
(f) Remedies.
Each of the parties to this Agreement and any such Person granted rights
hereunder whether or not such Person is a signatory hereto shall be entitled
to
enforce its rights under this Agreement specifically to recover damages and
costs (including reasonable attorney’s fees) for any breach of any provision of
this Agreement and to exercise all other rights existing in its favor. The
parties hereto agree and acknowledge that money damages may not be an adequate
remedy for any breach of the provisions of this Agreement and that any party
and
any such Person granted rights hereunder whether or not such Person is a
signatory hereto may in its sole discretion submit the matter to arbitration
for
specific performance and/or other injunctive relief (without posting any bond
or
deposit) in order to enforce or prevent any violations of the provisions of
this
Agreement.
(g) Amendment
and Waiver.
The provisions of this Agreement may be amended and waived only with the prior
written consent of the Company and the Restricted Shareholder and no course
of
conduct or failure or delay in enforcing the provisions of this Agreement shall
be construed as a waiver of such provisions or affect the validity, binding
effect or enforceability of this Agreement or any provision hereof.
(h) Notices.
Any notice provided for in this Agreement must be in writing and must be either
personally delivered, transmitted via facsimile, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated or at such other address or to the attention of such other person
as
the recipient party has specified by prior written notice to the sending party.
Notices will be deemed to have been given hereunder and received when delivered
personally, when received if transmitted via facsimile, five (5) days after
deposit in the U.S. mail and one (1) day after deposit with a reputable
overnight courier service.
If
to the Company, to:
Xxxxxxx
Company
Xxx
Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
Attention:
Chief Financial Officer and General Counsel
With
a copy to:
Xxxxxx
X. Xxx Partners, L.P.
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx,
XX 00000
Attention: Xxxxx
X.
Xxxxxx
Xxxx
X.
Xxxxxxxx
Xxxxxx Xxxxxx
If
to the Restricted Shareholder, to the address set forth underneath the
Restricted Shareholder’s name on the signature pages hereto.
(i) Business
Days.
If any time period for giving notice or taking action hereunder expires on
a day
which is a Saturday, Sunday or holiday in the state in which the Company’s chief
executive office is located, the time period for giving notice or taking action
shall be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.
(j) Survival
of Representations, Warranties and Agreements.
All representations, warranties and agreements contained herein shall survive
the consummation of the transactions contemplated hereby and the termination
of
this Agreement indefinitely.
(k) Descriptive
Headings.
The descriptive headings of this Agreement are inserted for convenience only
and
do not constitute a part of this Agreement.
(l) Construction.
Where specific language is used to clarify by example a general statement
contained herein, such specific language shall not be deemed to modify, limit
or
restrict in any manner the construction of the general statement to which it
relates. The language used in this Agreement shall be deemed to be the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party.
(m) WAIVER
OF JURY TRIAL.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT.
(n) Nouns
and Pronouns.
Whenever the context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.
(o) Acknowledgement
and Waiver.
The Restricted Shareholder hereby represents and warrants that he or she has
access to adequate information regarding the terms of this Agreement, the scope
and effect of the provisions set forth herein and all other matters encompassed
by this Agreement, to make an informed and knowledgeable decision with regard
to
enter into this Agreement. The Restricted Shareholder further represents and
warrants that he or she has not relied on the Company in deciding to enter
into
this Agreement and has instead made his or her own independent analysis and
decision to enter into this Agreement.
[Remainder
of Page Intentionally Left Blank]
IN
WITNESS WHEREOF, the parties hereto have executed this Restricted Stock
Agreement as of the date first written above.
XXXXXXX
COMPANY
By:
_/s/ Xxxxxxx X. Eitel________
Xxxxxxx
X. Xxxxx
Chairman
of the Board and
Chief
Executive Officer
RESTRICTED
SHAREHOLDER:
Xxxxxxx
X. XxXxxxxx
_/s/
Xxxxxxx X. McGuffey_______
Signature
Address:
_____________________
_____________________
_____________________
Shares
of Restricted Shareholder Stock Purchased: 6,000
EXHIBIT A
- ARBITRATION CLAUSE
(1) In
consideration of the benefits described in the Restricted Stock Agreement
executed by XXXXXXX
X. XXXXXXXX (the
“Restricted Shareholder” or “you”) and XXXXXXX
COMPANY,
a Delaware corporation (the “Company”), on the same date hereto and into which
this Exhibit A
is incorporated, (“Agreement”), the Company and you hereby agree that any
controversy or claim arising under federal, state and local statutory or common
or contract law between the Company and you involving the construction or
application of any of the terms, provisions, or conditions of the Agreement,
including, but not limited to, breach of contract, tort, and/or fraud, must
be
submitted to arbitration on the written request of either party served on the
other. Arbitration shall be the exclusive forum for any such controversy. For
example, if the Company and you have a dispute concerning the interpretation
or
enforceability of one or more restrictive covenants, the parties will resolve
the dispute exclusively through arbitration. The Arbitrator’s decision shall be
final and binding on both parties.
(2) If
any claim or cause of action at law or in equity is filed by either party in
any
state or federal court which results in arbitration being compelled and/or
the
claim or cause of action being dismissed, stayed, and/or removed to arbitration
pursuant to this Agreement, the party who instituted the claim or cause of
action in state or federal court, either wholly or in substantial part, shall,
at the discretion of the Arbitrator(s), reimburse the respondent for its
reasonable attorneys’ fees, costs, and necessary disbursements to the extent
permitted by law, in addition to any other relief to which it may be entitled,
related to the state or federal court claim or action.
(3) Excluding
the initial filing fee, which shall be borne by the claimant, the cost of
arbitration shall be borne by the Company, unless the Arbitrator determines
that
any claim(s) brought by you was/were wholly frivolous or fraudulent. If an
arbitration or any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party, either wholly
or in
substantial part, shall, at the discretion of the Arbitrator, be entitled to
its
reasonable attorneys’ fees, costs, and necessary disbursements to the extent
permitted by law, in addition to any other relief to which it may be
entitled.
(4) If
the Restricted Shareholder submits any controversy or claim to arbitration,
the
arbitration will be conducted in Atlanta, Georgia and all claims shall be
submitted to and administered by the American Arbitration Association’s
Southeast Case Management Center in Atlanta, Georgia. If the Company submits
any
controversy or claim to arbitration, the arbitration shall be conducted at
the
American Arbitration Association’s Local
or Regional Office
that is geographically closest to the Restricted Shareholder’s place of
residence and all claims shall be submitted to and administered by the American
Arbitration Association’s corresponding Case Management Center.
(5) The
arbitration shall comply with and be governed by the American Arbitration
Association’s Commercial Arbitration Rules (“Rules”) effective as of the
execution date below, to the extent such Rules are not contrary to the express
provisions of this Agreement. The parties also agree that the American
Arbitration Association Optional Rules for Emergency Measures of Protection
(“Emergency Rules”) shall apply to proceedings brought by either party. The
above Rules and Emergency Rules can be found at the following page of the
American Arbitration Association’s website, : .
You acknowledge that you should read these Rules and Emergency Rules and that
it
is your responsibility to be familiar with them prior to signing the Agreement.
If you are unable to access the Rules and/or Emergency Rules at the above
website, you can request a copy of them from a Company official prior to signing
the Agreement.
(6) The
parties agree and acknowledge that all provisions of this Agreement shall be
governed by and construed in
accordance with the laws of the State of Delaware exclusively and without
reference to principles of conflict of laws. The Federal Arbitration Act (“FAA”)
will supersede state laws to the extent inconsistent. Any claim(s) involving
the
construction or application of this Agreement must be submitted to arbitration
within the statute of limitations period for such claim(s) under Delaware state
law and shall be dismissed if the statute of limitations period is not met.
The
Arbitrator(s) shall have no authority to apply the law of any other
jurisdiction.
(7) The
dispute shall be heard and determined by one Arbitrator, unless both parties
mutually consent in writing signed by you and an authorized representative
of
Company to a panel of three (3) Arbitrators. Unless both parties mutually
consent otherwise, the parties agree and request that the Arbitrator(s) issue
a
reasoned award in accordance with Commercial Arbitration Rule
R-42(b).
I
UNDERSTAND THAT BY SIGNING THIS AGREEMENT I AM GIVING UP MY RIGHT TO A JURY
TRIAL.
Executed
effective as of this 29th
day of September, 2006.
|
__/s/
Xxxxxxx X. McGuffey_________
Xxxxxxx
X. XxXxxxxx
Social
Security #: __________________
|
Xxxxxxx
Company
By:
_/s/ Xxxxxxx X. Eitel_______
Xxxxxxx
X. Xxxxx
Chairman
of the Board and
Chief
Executive Officer
|
